Born to win

I am City A.M.'s deputy business features editor. I look after the Entrepreneurs page, Alternative Finance and our Office Politics section. I also help out with the Forum, running our daily debate. I have a special interest in distributed ledger technology. Prior to working at City A.M., I ran a social enterprise.

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Harriet Green

Michael: you’re only as good as your competition

SPONSORED CONTENT BY SANTANDER

McLaren tests a new piece of equipment every 20 minutes. “We have a different time frame compared to the real world,” says Sam Michael, sporting director of McLaren, speaking at Santander’s Breakthrough Box last week (see right). The British Formula One team is one of the most successful in F1 history. It’s won 182 races, 12 drivers’ championships and eight constructors’ championships.

So what can this international, technologically advanced company teach ambitious small and medium-sized businesses?

NEVER STAND STILL

For starters, they know how important it is to move fast. “Long-term for us is nine to 10 months,” says Michael. “Short-term is half an hour.” McLaren’s intense efficiency and productivity – across all divisions – stems, he says, from an unbreakable, unifying mindset: “we want to win.” Anyone who follows F1 will know that profit doesn’t come easy – you pay £1m for a millisecond, says Michael. “If we’re not winning, we need to spend more.”

This means that change – and change all the time – is paramount. “Our whole industry is geared around accepting change. Otherwise, someone else will go faster.” If you want to convince people to embrace change, he says, they need to understand what it is that moves an individual from being poor to being good. “That person must’ve changed something. If you don’t change anything, you’re relying on a competitor to make a mistake.”

But this long and tricky game also shows the importance of marginal gains: you may not see the difference – it might be infinitesimally small – but the key is that it moves you in the right direction. “The cars don’t look very different to an untrained eye, but every time there’s one on the track, something is different.”

SIZING UP THE COMPETITION

But in the racing industry, no change, however small, will remain a secret for long. “I love ideas that no one can replicate quickly,” Michael tells me. Often, a design takes months to produce, even if application is extremely quick.

There are no patents in F1 – and there’s a straightforward reason for this. If a development is an advantage other teams can’t access, those teams will simply vote it out. Any design – whether a seamless shift gearbox or inertia dampers – is up for grabs. “If we can come up with a design that makes our car go two-tenths quicker that we know the others can’t reproduce in 12 months, we’ll retain that advantage for a year.” And it’s the same with staff; F1 teams are notorious for poaching each other’s employees.

You might think that this cut-throat world isn’t a realistic model for small businesses to look to. But McLaren and its rivals provide almost perfect proof of how a focus on competition drives higher standards. “It is all relative. It doesn’t actually matter how good what you’ve built is – it’s got to be better than your rivals.”

BETTER THAN BETTER

This culture of pushing for excellence imbues the whole group. When a new garage is opened, it’s stripped, then painted and sealed in McLaren grey. Michael explains the hours that go into making sure each of its walls are dead straight: “Does the angle of a wall make the car go faster? Yes.” It’s about psychology, he says. If that much effort is put into the precision of the surroundings, those working there understand what attention to detail means.

The same is true of who McLaren chooses to work with. It’s partnered with Tag Heuer, ExxonMobil and Santander for years. And there’s an obvious formula: “don’t form partnerships with people who don’t have the same goals and realisations as you. They’ll just let you down,” says Michael. For him, it’s simply a case of asking a question: “why do you want to do F1?” Their answer, he says, will be that it means “everything to win.”

McLaren’s partnership with ExxonMobil also shows how far a reciprocal relationship can go. Over the years, the latter has furnished the former with lubricants, gear oil, hydraulic oils and, crucially, fuel. That’s meant times when both sides have felt the pressure to deliver. “But there’s nothing more enjoyable than having your partner pushing you – they’re doing it to make themselves better, but that’s also helping you,” says Michael.

DEFINE YOUR PLACE

Extreme technological innovation and high-profile partnerships are, at least when combined, largely the stuff of big firms. But back in the 1980s, F1 comprised teams of 40 or 50 – now each team has around 650 to 700 people. Growth and success, says Michael, is often down to having the right people, and getting them in the right roles. Many fast-growing businesses find it a challenge to start delineating between managers and leaders – often, those roles have been held by the same person, he says. “In our case, it happens to still be the same person [Ron Dennis] in charge. But now, he concentrates on leadership and vision – because that’s where his strengths are.” As far as Michael is concerned, it’s key to start splitting roles up once you’re past the 50 employees mark. The lines can get blurred, he adds – “good leaders often think they’re good managers and vice versa – and they’re not. It’ll be very difficult for you to stay competitive.” That said, he adds, “if you can get somebody to do both, then you have a visionary leader, no question.”

For more information about Santander’s Breakthrough Box, where it’s going and what it can offer your business, visit www.santandercb.co.uk